Three councils are taking the government to court over the cancellation of multi-million-pound contracts to build new schools.

In July, the education secretary, Michael Gove, axed the £55bn Building Schools for the Future initiative. He said it had been dogged by "massive overspends, tragic delays, botched construction projects and needless bureaucracy".

More than 700 schools were told their plans for new or refurbished buildings would not go ahead and another 151 were placed "under discussion".

Nottingham City Council, Luton Borough Council and Waltham Forest Council, which have had school building projects stopped, are mounting legal proceedings to win back the funding they had expected.

Nottingham and Luton are taking the action jointly and have lodged papers in the Leeds administrative court requesting for a judicial review.

The councils claim they had a legitimate expectation that their schools would receive money for refurbishment because business plans detailing what building works would take place had been approved in February. The councils argue that the government has behaved irrationally.

Nottingham City Council said it was prepared to take "whatever action is necessary" to secure the funds.

Waltham Forest, in north-east London, said it had spent £17m on plans to update classrooms, only to have the funds turned down. The decision to withdraw the money would have a "catastrophic effect" on its pupils, it said.

David Mellen, Nottingham City Council's portfolio holder for children's services, said: "The council has explored a number of options in order to secure funding to carry out the planned remodelling of Top Valley and Trinity schools which have been stopped.

"We have sought counsel's advice on whether to take legal action to resolve this dispute and our decision to push ahead with legal proceedings has not been taken lightly."

He said he had received a petition of more than 5,000 signatures which called for the council to take action.

Waltham Forest Council's leader, Chris Robbins, said: "The government's decision to cancel the BSF projects in Waltham Forest is having a catastrophic effect on our pupils and staff and we've been doing everything we can to persuade them to change their minds.

"We've gone about this the right way and we've tried to come to a reasonable agreement with the government.

"It's with a heavy heart that we've been forced to apply for a judicial review in order to do what is best for our pupils and our schools."

A Department for Education spokesman said: "We understand people's disappointment but the BSF programme was wasteful, needlessly bureaucratic and seriously behind schedule. It would have been inexcusable to have continued with the programme.

"Ministers have been clear that the end of BSF is not the end of school rebuilding. That is why the government has launched a comprehensive review of all capital spending in schools."

Meanwhile, researchers have discovered pupils who attend newly built schools make less progress than their peers in older school buildings. The National Foundation for Educational Research found pupils achieved GCSEs almost two grades lower if they went to a school that was given BSF money. The study analysed pupils at 60 of the 186 schools awarded the funds.